Tuesday, September 22, 2009

Perp walk: Pace Airlines CEO arrested for not paying employees' health insurance

by B. N. Sullivan

William C. Rodgers, the CEO of charter carrier Pace Airlines, was arrested today at Piedmont Triad International Airport, Greensboro, NC. He has been charged with one count of willful failure to pay group health insurance premiums. According to North Carolina news station Fox 8, Rodgers "knowingly canceled his employee group health insurance without providing the required 45-day notice to his 337 employees." The Fox 8 video, below, shows Rodgers being led into the Forsyth County Magistrate's office.

If the video does not play or display properly above, click here to view it on Fox 8.

Today's arrest of Rodgers, while dramatic, is only the latest event marking the downward spiral of Pace Airlines. On August 21, 2009, the North Carolina Department of Labor began investigating claims that employees of the carrier were not being paid. Nonpayment of wages for a month or more put those employees in a a cruel limbo: they were not getting their paychecks, yet if they simply quit, they would not be eligible tot file for unemployment benefits.

In early September, some unpaid employees spoke about their plight with reporters outside Pace headquarters in Winston-Salem, NC. The Winston-Salem Journal quoted an unpaid employee from Pace's parts department:
"Most of us live paycheck to paycheck, so when the paychecks stopped coming, we've had to drain whatever savings we had," he said. "I feel like I can't walk (from Pace) because I'm afraid I won't get paid what I'm owed and they'll fight me getting unemployment."
Employees showed journalists a July 1 memo from Rodgers that said one reason for Pace's financial struggles was that Continental owed Pace $1 million for work it had already completed. A spokeswoman for Continental said that "Continental was current on its payments to Pace." Continental ultimately canceled its contract with Pace.

On September 8, 2009, Fox 8 reported that "roughly 200 employees were told they were being 'furloughed without attachment,' a technical way of saying the company has no plans of hiring them back."

Fox 8 quoted a Pace employee who said, "The letter says furlough, but we asked about callbacks and they said there will be no callbacks. We will have to reapply if the company decides to hire again."

"At least we will have some type of guaranteed pay, but now everybody's question is, 'What about the four, five weeks they owe us?'" he said, referring to unpaid back wages.

A few days later, the Winston-Salem Journal announced that the U.S. Department of Labor had become involved as well. In an article dated September 11, Journal reporter Richard Carver wrote:
The company learned today that it is the subject of an investigation by the U.S. Labor Department's Wage and Hours Division, which is investigating issues of nonpayment of hourly and overtime wages as related to the Fair Labor Standards Act.
That same day, another 75 to 100 Pace employees were shown the door. By that time, according to the Journal, employees were owed three two-week paychecks.

Meanwhile, employees discovered that in addition to not receiving paychecks, their health insurance was no being funded either. This allegation prompted an investigation by North Carolina's Department of Insurance, which ultimately led to today's arrest of Rodgers.

Last week Pace Airlines advised the Federal Aviation Administration (FAA) that it had "temporarily ceased operations" for a period of up to 90 days. On September 17, Fox 8 quoted a spokeswoman for the FAA who said that the agency had "increased its surveillance of Pace." (Ya think??)

UPDATE Sep. 28, 2009: Fox 8 is reporting today that the Forsyth County Airport Commission has asked Pace Airlines to vacate its space at Smith Reynolds Airport by Sep. 30, 2009. According to Fox 8, the Commission "cites unpaid September rent and and other overdue rent payments as the reason for the request," and notes that Pace Airlines is the airport's largest tenant.